Preview
IWIICVOIHIMA lp
Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 1 of 11 _—
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
SABA HASHEM, individually, and as a
Member of, and derivatively on behalf of,
D’Angelo and Hashem, LLC,
Plaintiff, Civil Action No. 16-cy-12383-IT
v.
STEPHEN L. D’ANGELO, D’ANGELO
LAW GROUP, LLC, and D’ANGELO
AND HASHEM, LLC
Defendants
eee KR HH HH HK
OPPOSITION TO EMERGENCY MOTION
FOR PRELIMINARY INJUNCTION
NOW COME Intervention and Reach and Apply Defendants Stephen D’Angelo
(“D’ Angelo”) and D’ Angelo Law Group, LLC (‘DLA”) and opposes Intervention-Plaintiff's,
(“Carrion”) Emergency Motion for a Preliminary Injunction.
Short Statement of Legal Argument
As grounds herefore, D’Angelo and DLA state that Carrion, through her counsel, has
alleged, in shotgun fashion, at least 3 of the 4 theories of recovery under doctrine(s) of corporate
“successor liability” without citation to any controlling legal authorities to support her position.’
The lack of cited authority, discussed infra, is persuasive that there is no applicability of any of
* carrion broadly asserts that D'Angelo and DLA are responsible to pay the execution she obtained against Hashem
and D & H “under several theories of liability, ‘including and without limitation,’ successor liability or de facto
merger doctrine, ‘willful dissipation assets to ‘fraudulently’ avoid creditor's claims, and ‘fraudulent transfer.”
Carrion’s Motion, p. 2.Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 2 of 11
the 4 recognized theories under the doctrine of successor liability. The lack of authority to
support Carrion’s position does not create a scenario under the law that she has a “high
likelihood of prevailing on the merits,” as stated in her moving papers.
Additionally, there has been no willful “dissipation of ‘assets.” As discussed
hereinbelow, free thinking law clients are not commodities or assets. Nor has there been any
fraudulent transfer. Neither was any Court Order violated.” The Preliminary Injunction, issued
on July 17, 2012 proscribed D & H and its partners, and others, from
“1) Taking any unlawful action to hinder or delay, or defraud, the plaintiff from
collecting Plaintiff's judgment in [that] action; and 2) Transferring, alienating or
encumbering any assets of the defendants other than in the ordinary course of
business.” (Emphasis and Bold added.)°
Nowhere has Carrion showed the type of conduct prohibited by Justice Leibensberger’s
Order. It was impossible for D’ Angelo to transfer, alienate or encumber any “assets.” Clients,
unlike widgets, aren’t assets, and what D’ Angelo did was in the only ordinary course of business
he could undertake at the time of Hashem’s suspension. In fact, D’ Angelo was ethically tasked
with communicating with every client, within a short period of time, to determine with whom
and how they wanted to proceed with their claims,
Intervention-Plaintiff is also proceeding before this Court under a theory of “reach and
apply.” Regarding the remedy of reach and apply: reach and apply applies to those situations
where monies owed to a judgment-creditor are being paid by a third party to a judgment debtor.
? Carrion’s counsel incorrectly identifies the State Court Order for Preliminary Injunction as July 12, 2012. Carrion’s
Motion, P. 2, Exhibit H, File Reference No. 54.
3 As a threshold statement, one thing that separates assets on the balance sheet from our customers is that our
law clients have a preference, while our assets don't. Has your front end loader ever woken up one morning and
said - | don't like this yellow paint; | am going to get my awner to paint me green? Simply put, we own assets, but |
don't think that it truly can be said that lawyers own their clients.Case 1:16-cv-12383-IT Document168 Filed 12/04/18 Page 3 of 11
(Emphasis added.) Neither D’Angelo nor DLA is a judgment debtor! G.L. 214, Section 3(7)
which states in part, “...but unless it is a judgment debt, the business of the partnership shall not
be enjoined or otherwise interrupted further than to restrain the withdrawal of any portion of the
debtor's share or interest therein until the plaintiff's debt is established,...” Additionally Section
3(8) of G.L. 214 also requires fraudulent intent or a fraudulent transfer, conduct that has not
occurred in this matter, which is discussed below in more detail. Section 8 requires “Actions to
reach and apply in payment of a debt any property, right, title or interest, real or personal, of a
debtor, liable to be attached or taken on execution in a civil action against him and fraudulently
conveyed by him with intent to defeat, delay or defraud his creditors, or purchased, or directly or
indirectly paid for, by him, the record or other title to which is retained in the vendor or is
conveyed to a third person with intent to defeat, delay or defraud the creditors of the debtor.”
That type of conduct has simply not occurred in the case before Your Honor.
Secondly and equally important, the law does not provide that someone who has a
remedy of damages, which Carrion has already obtained, (regardless of whether it has been
collected,) that “irreparable” injury has occurred or will occur. See generally Packaging
Industries, Inc. v. Cheney, 380 Mass. 609. It is well settled law that both prongs have to be
proven for a Court to order the extraordinary relief of an injunction, particularly an injunction
whose terms orders a person to affirmatively do something, i.e. deposit funds, (Emphasis added.)
See generally Mass. R. Civ. P. 65.
From a public policy standpoint, if the Court were to issue and Order which Carrion
seeks, the traditional notions of the limited liability entities and respect for the corporate entity
recognized in the Commonwealth, without the existence of one of the 4 exceptions, would be
abrogated. On the other hand, Carrion has a judgment for damages. That is her remedy underCase 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 4 of 11
the law. No amount of impatience by her or her counsel in collecting monies to satisfy that
judgment can be transformed into a situation where she faces a truly irreparable injury within the
meaning of the law. (Emphasis added.) The Massachusetts Supreme Judicial Court has defined,
narrowly, the meaning of irreparable harm. Irreparable harm is not any kind of harm a party can
invoke, but “a loss of rights that cannot be vindicated should it prevail after a full hearing on the
merits.” (Emphasis and Bold added.) Packaging Industries, Inc. v. Cheney, 380 Mass. 609, 616
(1980). This is not the situation in the case before your Honor.
From a balance of the harms perspective, an order escrowing 100% of settlements would
simply and swiftly derail the operations of DLA, the entity from which Intervention-Plaintiff is
seeking recovery. The relief that Intervention-Plaintiff seeks would not simply create an
inconvenience. As discussed below, DLA has clients, trade creditors, rent, taxes and staff and
professional employees who depend on the ability of DLA to operate in the ordinary course of
business. Those employees have personal financial! obligations of their own such as rent,
mortgages, car payments and grocery needs,
Analysis
IL The Theory of “De Facto Merger” and Doctrine of Successor Liability does not
and should not apply.
‘The traditional exception for de facto mergers, as Carrion’s counsel asserts, is a
narrow one. Asa threshold matter, the theory of de facto merger contemplates that a
transaction took place between 2 entities: a sale of assets for instance.
Cargill, Inc. v. Beaver Coal & Co., 424 Mass. 356 (1997). Just as importantly, four
factors are relevant regarding whether a transaction amounts to a de facto merger.
They are, in the conjunctive:Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 5 of 11
1) Whether there is continuity of management, personnel, physical location
assets, and general business operations; and
2) Whether there is a continuity of shareholders because the purchasing
corporation paid for the assets of the seller with shares of the buyer’s stock;
and
3) Whether the selling corporation ceases to do business; and
4) Whether the purchasing corporation assumes the obligations necessary to
continue the normal business operations of the seller. Jd. at 360.
In the case at bench:
1) The management is different. D & H was a 2 person member-managed limited
liability company (“LLC”) and DLA is a 1 person member-managed LLC.
2) There is no continuity of shareholders or membership interests, and
3) There was no purchase of seller’s assets with buyer’s stock, either.
4) As pointed out there was never any sale, but D & H ceased operations; and,
DLA never expressly or implicitly knowingly assumed the obligations of
D&H.
There is also no evidence of fraudulent intent or fraudulent transfer.
Intervention-Plaintiff Carrion claims that D’Angelo’s meetings with former
individual clients of D & H and, formation of DLA after the Hashem suspension,
and allowing D & H to become administratively dissolved was his “deceitful effort”
to deprive Carrion of her then ability to collect monies to satisfy her judgment andTl.
Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 6 of 11
that these activities were “illegitimate efforts” constituting “fraudulent transfers”.
Carrion’s Motion, P. 3.
Any Court would be hard-pressed to establish that the “transaction”, or rather the
emergency situation that was forced upon D’Angelo, and the resulting ethical
obligations he was obliged to undertake, which he complied with, was or were
intended to defraud the creditors of the predecessor LLC or its creditors. Argument
to the contrary is mere hyperbole and a jump from, understandably, frustration with
collections to a conclusion of nefarious motive.
Typically, the transaction, as was D’Angelo’s cessation of his business ties with
Hashem and D & H, and his subsequent individually meeting and/or corresponding
with each D & H client as to whether they wished to seek other counsel, was
legitimate. Melick, Jeffrey C. and Kayko, Weisman & Colsanti, LLP, Massachusetts
Tort Law Manual, Section 2.6.6 [Successor Corporation Liability].
D’Angelo also was prohibited from sharing fees with an incapacitated lawyer,
Hashem, after he was suspended. See Massachusetts Rule of Professional Conduct
5.4(a). Hence, the lack of sharing or “escrowing” D & H revenues at that time was
prohibited ethical canon.
Clients of professionals are not assets
The nature of professional clients’ value is found in personal goodwill, not
enterprise goodwill: Gaines y. Luongo, No. A-3600-09T3 Superior Court of New
Jersey, Appellate Division March 25, 2011Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 7 of 11
A discussion of enterprise and personal goodwill is helpful to an analysis of
whether former D & H clients can be viewed as assets. Value assigned to a client
would only be paid with the expectation that the elements of value associated to the
client could be transferred to another owner, as opposed to value that resides solely
with the current owner. Enterprise goodwill is the goodwill of the business. In selling
a business one has the ability to transfer enterprise goodwill to the buyer. Personal
goodwill is goodwill that adheres to an individual. It consists of personal attributes of
a practitioner including personal relationships, skill, personal reputation and various
other factors. It is usually not transferrable. A useful working definition of personal
goodwill is "the part of increased earning capacity that results from the reputation,
knowledge and skills of an individual person and is not transferrable and
unmarketable.
The value of clients in a professional corporation is found in the personal
goodwill of the particular professional. D’ Angelo submits that it was he who created
as well as preserved the personal goodwill of the clients. Along these lines, it seems
logical to allow Hashem, the culpable actor underlying all of this, to go forward with
his “quantum meruit” claims and that there be no recovery until those claims are
adjudicated at this procedural posture in the case.
Gaines and Luongo recognized this when they dissolved their accounting firm,
GGL, and left it up to the clients to determine who they wanted to utilize as their
accountant. This New Jersey Appellate Court found that in a dissolution of a
professional firm clients were not assets. In fact, in this New Jersey matter, which isIv.
Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 8 of 11
instructive in this matter, Accountants Gaines and Luongo left it up to the clients to
decide who they wanted to utilize for their professional services, As the Court knows,
attorneys are ethically bound to all allow clients this discretion. Accordingly,
D’Angelo, when left with a fellow LLC member’s suspension from the practice of
law, acted as he must under the Massachusetts Rules of Professional Conduct.
Intervention-Plaintiff cannot show a genuine “irreparable injury”
In order to make a suitable showing of irreparable injury, the moving party must
establish a colorable threat of immediate injury, see Massachusetts Coalition of
Citizens With Disabilities v. Civil Defense Agency, 649 F.2d 71, 74 (1st Cir. 1981),
and the absence of any adequate remedy at law for such injury. McDonough v.
United States Department of Labor, 646 F. Supp. 478, 482 (D. Me. 1986).
Finally, where economic damages are the injury relied upon, it is to be
remembered that economic harm, in and of itself, is not sufficient to constitute
irreparable injury. Id. See also McDonough v. Trustees of University System of New
Hampshire, 704 F.2d 780, 784 n.2 (1st Cir. 1983).
Intervention-Plaintiff’s harm is economic, not and immediate harm that could
never be redressed absent Court interdiction. It can be remedied with a legal
judgment. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bishop, 839 F. Supp. 68.Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 9 of 11
Vv. A weighing of the balance of harms do not comport with the scope of relief.
Public policy supports the traditional recognition of the corporate form and
limited liability of same absent a showing of all 4 elements of the successor liability
doctrine. Imposition of liability by Court Order, especially prior to any judgment,
along the parameters of what Intervention-Plaintiff seeks ignores the general
recognition of corporations and limited liability companies’ limited liability in the
Commonwealth.
It is also respectfully submitted that the Court should also consider the
interference with D’Angelo’s ability to continuing operating DLA. Expected
settlement revenues are often already “called for.” Specifically D’ Angelo incurs
substantial expenses, including payroll, (Attorneys are paid upon settlement
collection), often for many weeks of work. Other expenses include expert witness
fees, costs related to suits and operation of the firm, and quarterly taxes. It is simply
impractical and unfair to the employees of the law firm to have the cash flow of the
firm so drastically interfered with. Should the Court be inclined to issue a
preliminary injunction, it is respectfully requested and suggested that a certain
percentage of the cash flow be exempt from your Honor’s order, so as to allow DLA
to continue to operate, serve its clients, pay its necessary bills, payroll and taxes and
eam revenues.
4 A review of the accounting provided to this Court, as Ordered shows the demands on DLA’s cashflow, in other
words its revenues from settlements...Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 10 of 11
On the other hand, it is respectfully submitted that Intervention-Plaintiff’s
assertions about Defendants’ ability to have entire settlements escrowed to pay her
judgment assumes and conjects much about the cash flow of DLA, and the demands
on that cash flow from DLA’s contingency fee based legal practice. (See also the
Affidavit of Stephen D’Angelo submitted herewith.)
Conclusion
It is respectfully posited that a preliminary injunction should not and cannot issue.
Intervention-Plaintiff has failed to show a high likelihood, as she claims in her moving papers, or
likelihood that a de facto merger took place in this matter. Moreover, there was no fraudulent
transfer of assets, or surreptitious activity of any nature to defraud creditors by D’ Angelo and
DLA. Public policy supports the traditional recognition of the corporate form and limited
liability of same absent a showing of all 4 elements of the successor liability doctrine. A
weighing of the balance of the harms, should this Honorable Court order an Injunction with the
scope and parameters of what Intervention-Plaintiff seeks would tip the scales on inequity of
those clients, creditor and employees and their families who depend on the capability of DLA to
continue to operate.
10Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 11 of 11
Dated: December 4, 2018 Respectfully submitted,
Defendants,
Stephen D’Angelo and
D'Angelo Law Group, LLC
by their attorneys,
COSSINGHAM LAW OFFICE, PC
/sf
Kenneth A Cossingham Esquire
BBO#100970
Thomas C. LaPorte, Esquire
BBO#634194
Cossingham Law Office, PC
30 Massachusetts Ave., Suite 404
North Andover, MA 01845
Tel: 978-685-5686
Fax: 978-794-0985
kcossingham@cossinghamlaw.com
CERTIFICATE OF SERVICE
I, Kenneth A. Cossingham, Esquire hereby certify that on this 4" day of December 2018,
a copy of the foregoing Opposition to Emergency Motion for Preliminary Injunction was served
via the Court’s CM/ECF system to the registered participants as identified on the Notice of
Electronic Filing (NEF) and paper copies will be sent to those indicated as non-registered
participants.
Ish
Kenneth A. Cossingham, Esquire
11IB MCVOINIGA ~— Ide
Case 1:16-cv-12383-IT Document 168-1 Filed 12/04/18 Page 1 of 2
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
SABA HASHEM, individually, andasa = *
Member of, and derivatively on behalf of, *
D’Angelo and Hashem, LLC, *
Plaintiff, * Civil Action No. 16-cv-12383-IT
*
Vv. *
*
STEPHEN L. D’ANGELO, D’ANGELO *
LAW GROUP, LLC, and D’ANGELO *
AND HASHEM, LLC *
Defendants
AFFIDAVIT IN SUPPORT OF
OPPOSITION TO EMERGENCY MOTION
FOR PRELIMINARY INJUNCTION
I, Stephen L. D’Angelo, do hereby depose of my own personal knowledge the following:
1. T operate on a cash-flow basis like most other businesses. However, I have no
predictability regarding that flow. I cannot predict settlements. Trials are even more
complex. It is next to impossible to conduct a break-even analysis on a single case.
2. The success of the business is wholly dependent upon cases. I use lines of credit and my
own funds to finance the firm, to carry it over during lag periods.
3. Ifthe Court freezes the funds as Plaintiff seeks, ] will need to close the doors. Settlement
funds, as is evidenced in the accounting for the Toll Brothers Settlement, are typically
used to pay off arrearages, including taxes, payment to trade creditors, rent, utilities, and
payroll.Case 1:16-cv-12383-IT Document 168-1 Filed 12/04/18 Page 2 of 2
4. Ihave several staff employees as well as professional staff which depend on this cash-
flow for their livelihoods and to provide for their families, including the simplest items
like groceries and rent.
I declare under the penalties of perjury that the foregoing is true and accurate.
‘sf
Stephen L. D’Angelo, Esquire
Preview
IWIICVOIHIMA lp Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 1 of 11 _— UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS SABA HASHEM, individually, and as a Member of, and derivatively on behalf of, D’Angelo and Hashem, LLC, Plaintiff, Civil Action No. 16-cy-12383-IT v. STEPHEN L. D’ANGELO, D’ANGELO LAW GROUP, LLC, and D’ANGELO AND HASHEM, LLC Defendants eee KR HH HH HK OPPOSITION TO EMERGENCY MOTION FOR PRELIMINARY INJUNCTION NOW COME Intervention and Reach and Apply Defendants Stephen D’Angelo (“D’ Angelo”) and D’ Angelo Law Group, LLC (‘DLA”) and opposes Intervention-Plaintiff's, (“Carrion”) Emergency Motion for a Preliminary Injunction. Short Statement of Legal Argument As grounds herefore, D’Angelo and DLA state that Carrion, through her counsel, has alleged, in shotgun fashion, at least 3 of the 4 theories of recovery under doctrine(s) of corporate “successor liability” without citation to any controlling legal authorities to support her position.’ The lack of cited authority, discussed infra, is persuasive that there is no applicability of any of * carrion broadly asserts that D'Angelo and DLA are responsible to pay the execution she obtained against Hashem and D & H “under several theories of liability, ‘including and without limitation,’ successor liability or de facto merger doctrine, ‘willful dissipation assets to ‘fraudulently’ avoid creditor's claims, and ‘fraudulent transfer.” Carrion’s Motion, p. 2.Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 2 of 11 the 4 recognized theories under the doctrine of successor liability. The lack of authority to support Carrion’s position does not create a scenario under the law that she has a “high likelihood of prevailing on the merits,” as stated in her moving papers. Additionally, there has been no willful “dissipation of ‘assets.” As discussed hereinbelow, free thinking law clients are not commodities or assets. Nor has there been any fraudulent transfer. Neither was any Court Order violated.” The Preliminary Injunction, issued on July 17, 2012 proscribed D & H and its partners, and others, from “1) Taking any unlawful action to hinder or delay, or defraud, the plaintiff from collecting Plaintiff's judgment in [that] action; and 2) Transferring, alienating or encumbering any assets of the defendants other than in the ordinary course of business.” (Emphasis and Bold added.)° Nowhere has Carrion showed the type of conduct prohibited by Justice Leibensberger’s Order. It was impossible for D’ Angelo to transfer, alienate or encumber any “assets.” Clients, unlike widgets, aren’t assets, and what D’ Angelo did was in the only ordinary course of business he could undertake at the time of Hashem’s suspension. In fact, D’ Angelo was ethically tasked with communicating with every client, within a short period of time, to determine with whom and how they wanted to proceed with their claims, Intervention-Plaintiff is also proceeding before this Court under a theory of “reach and apply.” Regarding the remedy of reach and apply: reach and apply applies to those situations where monies owed to a judgment-creditor are being paid by a third party to a judgment debtor. ? Carrion’s counsel incorrectly identifies the State Court Order for Preliminary Injunction as July 12, 2012. Carrion’s Motion, P. 2, Exhibit H, File Reference No. 54. 3 As a threshold statement, one thing that separates assets on the balance sheet from our customers is that our law clients have a preference, while our assets don't. Has your front end loader ever woken up one morning and said - | don't like this yellow paint; | am going to get my awner to paint me green? Simply put, we own assets, but | don't think that it truly can be said that lawyers own their clients.Case 1:16-cv-12383-IT Document168 Filed 12/04/18 Page 3 of 11 (Emphasis added.) Neither D’Angelo nor DLA is a judgment debtor! G.L. 214, Section 3(7) which states in part, “...but unless it is a judgment debt, the business of the partnership shall not be enjoined or otherwise interrupted further than to restrain the withdrawal of any portion of the debtor's share or interest therein until the plaintiff's debt is established,...” Additionally Section 3(8) of G.L. 214 also requires fraudulent intent or a fraudulent transfer, conduct that has not occurred in this matter, which is discussed below in more detail. Section 8 requires “Actions to reach and apply in payment of a debt any property, right, title or interest, real or personal, of a debtor, liable to be attached or taken on execution in a civil action against him and fraudulently conveyed by him with intent to defeat, delay or defraud his creditors, or purchased, or directly or indirectly paid for, by him, the record or other title to which is retained in the vendor or is conveyed to a third person with intent to defeat, delay or defraud the creditors of the debtor.” That type of conduct has simply not occurred in the case before Your Honor. Secondly and equally important, the law does not provide that someone who has a remedy of damages, which Carrion has already obtained, (regardless of whether it has been collected,) that “irreparable” injury has occurred or will occur. See generally Packaging Industries, Inc. v. Cheney, 380 Mass. 609. It is well settled law that both prongs have to be proven for a Court to order the extraordinary relief of an injunction, particularly an injunction whose terms orders a person to affirmatively do something, i.e. deposit funds, (Emphasis added.) See generally Mass. R. Civ. P. 65. From a public policy standpoint, if the Court were to issue and Order which Carrion seeks, the traditional notions of the limited liability entities and respect for the corporate entity recognized in the Commonwealth, without the existence of one of the 4 exceptions, would be abrogated. On the other hand, Carrion has a judgment for damages. That is her remedy underCase 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 4 of 11 the law. No amount of impatience by her or her counsel in collecting monies to satisfy that judgment can be transformed into a situation where she faces a truly irreparable injury within the meaning of the law. (Emphasis added.) The Massachusetts Supreme Judicial Court has defined, narrowly, the meaning of irreparable harm. Irreparable harm is not any kind of harm a party can invoke, but “a loss of rights that cannot be vindicated should it prevail after a full hearing on the merits.” (Emphasis and Bold added.) Packaging Industries, Inc. v. Cheney, 380 Mass. 609, 616 (1980). This is not the situation in the case before your Honor. From a balance of the harms perspective, an order escrowing 100% of settlements would simply and swiftly derail the operations of DLA, the entity from which Intervention-Plaintiff is seeking recovery. The relief that Intervention-Plaintiff seeks would not simply create an inconvenience. As discussed below, DLA has clients, trade creditors, rent, taxes and staff and professional employees who depend on the ability of DLA to operate in the ordinary course of business. Those employees have personal financial! obligations of their own such as rent, mortgages, car payments and grocery needs, Analysis IL The Theory of “De Facto Merger” and Doctrine of Successor Liability does not and should not apply. ‘The traditional exception for de facto mergers, as Carrion’s counsel asserts, is a narrow one. Asa threshold matter, the theory of de facto merger contemplates that a transaction took place between 2 entities: a sale of assets for instance. Cargill, Inc. v. Beaver Coal & Co., 424 Mass. 356 (1997). Just as importantly, four factors are relevant regarding whether a transaction amounts to a de facto merger. They are, in the conjunctive:Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 5 of 11 1) Whether there is continuity of management, personnel, physical location assets, and general business operations; and 2) Whether there is a continuity of shareholders because the purchasing corporation paid for the assets of the seller with shares of the buyer’s stock; and 3) Whether the selling corporation ceases to do business; and 4) Whether the purchasing corporation assumes the obligations necessary to continue the normal business operations of the seller. Jd. at 360. In the case at bench: 1) The management is different. D & H was a 2 person member-managed limited liability company (“LLC”) and DLA is a 1 person member-managed LLC. 2) There is no continuity of shareholders or membership interests, and 3) There was no purchase of seller’s assets with buyer’s stock, either. 4) As pointed out there was never any sale, but D & H ceased operations; and, DLA never expressly or implicitly knowingly assumed the obligations of D&H. There is also no evidence of fraudulent intent or fraudulent transfer. Intervention-Plaintiff Carrion claims that D’Angelo’s meetings with former individual clients of D & H and, formation of DLA after the Hashem suspension, and allowing D & H to become administratively dissolved was his “deceitful effort” to deprive Carrion of her then ability to collect monies to satisfy her judgment andTl. Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 6 of 11 that these activities were “illegitimate efforts” constituting “fraudulent transfers”. Carrion’s Motion, P. 3. Any Court would be hard-pressed to establish that the “transaction”, or rather the emergency situation that was forced upon D’Angelo, and the resulting ethical obligations he was obliged to undertake, which he complied with, was or were intended to defraud the creditors of the predecessor LLC or its creditors. Argument to the contrary is mere hyperbole and a jump from, understandably, frustration with collections to a conclusion of nefarious motive. Typically, the transaction, as was D’Angelo’s cessation of his business ties with Hashem and D & H, and his subsequent individually meeting and/or corresponding with each D & H client as to whether they wished to seek other counsel, was legitimate. Melick, Jeffrey C. and Kayko, Weisman & Colsanti, LLP, Massachusetts Tort Law Manual, Section 2.6.6 [Successor Corporation Liability]. D’Angelo also was prohibited from sharing fees with an incapacitated lawyer, Hashem, after he was suspended. See Massachusetts Rule of Professional Conduct 5.4(a). Hence, the lack of sharing or “escrowing” D & H revenues at that time was prohibited ethical canon. Clients of professionals are not assets The nature of professional clients’ value is found in personal goodwill, not enterprise goodwill: Gaines y. Luongo, No. A-3600-09T3 Superior Court of New Jersey, Appellate Division March 25, 2011Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 7 of 11 A discussion of enterprise and personal goodwill is helpful to an analysis of whether former D & H clients can be viewed as assets. Value assigned to a client would only be paid with the expectation that the elements of value associated to the client could be transferred to another owner, as opposed to value that resides solely with the current owner. Enterprise goodwill is the goodwill of the business. In selling a business one has the ability to transfer enterprise goodwill to the buyer. Personal goodwill is goodwill that adheres to an individual. It consists of personal attributes of a practitioner including personal relationships, skill, personal reputation and various other factors. It is usually not transferrable. A useful working definition of personal goodwill is "the part of increased earning capacity that results from the reputation, knowledge and skills of an individual person and is not transferrable and unmarketable. The value of clients in a professional corporation is found in the personal goodwill of the particular professional. D’ Angelo submits that it was he who created as well as preserved the personal goodwill of the clients. Along these lines, it seems logical to allow Hashem, the culpable actor underlying all of this, to go forward with his “quantum meruit” claims and that there be no recovery until those claims are adjudicated at this procedural posture in the case. Gaines and Luongo recognized this when they dissolved their accounting firm, GGL, and left it up to the clients to determine who they wanted to utilize as their accountant. This New Jersey Appellate Court found that in a dissolution of a professional firm clients were not assets. In fact, in this New Jersey matter, which isIv. Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 8 of 11 instructive in this matter, Accountants Gaines and Luongo left it up to the clients to decide who they wanted to utilize for their professional services, As the Court knows, attorneys are ethically bound to all allow clients this discretion. Accordingly, D’Angelo, when left with a fellow LLC member’s suspension from the practice of law, acted as he must under the Massachusetts Rules of Professional Conduct. Intervention-Plaintiff cannot show a genuine “irreparable injury” In order to make a suitable showing of irreparable injury, the moving party must establish a colorable threat of immediate injury, see Massachusetts Coalition of Citizens With Disabilities v. Civil Defense Agency, 649 F.2d 71, 74 (1st Cir. 1981), and the absence of any adequate remedy at law for such injury. McDonough v. United States Department of Labor, 646 F. Supp. 478, 482 (D. Me. 1986). Finally, where economic damages are the injury relied upon, it is to be remembered that economic harm, in and of itself, is not sufficient to constitute irreparable injury. Id. See also McDonough v. Trustees of University System of New Hampshire, 704 F.2d 780, 784 n.2 (1st Cir. 1983). Intervention-Plaintiff’s harm is economic, not and immediate harm that could never be redressed absent Court interdiction. It can be remedied with a legal judgment. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bishop, 839 F. Supp. 68.Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 9 of 11 Vv. A weighing of the balance of harms do not comport with the scope of relief. Public policy supports the traditional recognition of the corporate form and limited liability of same absent a showing of all 4 elements of the successor liability doctrine. Imposition of liability by Court Order, especially prior to any judgment, along the parameters of what Intervention-Plaintiff seeks ignores the general recognition of corporations and limited liability companies’ limited liability in the Commonwealth. It is also respectfully submitted that the Court should also consider the interference with D’Angelo’s ability to continuing operating DLA. Expected settlement revenues are often already “called for.” Specifically D’ Angelo incurs substantial expenses, including payroll, (Attorneys are paid upon settlement collection), often for many weeks of work. Other expenses include expert witness fees, costs related to suits and operation of the firm, and quarterly taxes. It is simply impractical and unfair to the employees of the law firm to have the cash flow of the firm so drastically interfered with. Should the Court be inclined to issue a preliminary injunction, it is respectfully requested and suggested that a certain percentage of the cash flow be exempt from your Honor’s order, so as to allow DLA to continue to operate, serve its clients, pay its necessary bills, payroll and taxes and eam revenues. 4 A review of the accounting provided to this Court, as Ordered shows the demands on DLA’s cashflow, in other words its revenues from settlements...Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 10 of 11 On the other hand, it is respectfully submitted that Intervention-Plaintiff’s assertions about Defendants’ ability to have entire settlements escrowed to pay her judgment assumes and conjects much about the cash flow of DLA, and the demands on that cash flow from DLA’s contingency fee based legal practice. (See also the Affidavit of Stephen D’Angelo submitted herewith.) Conclusion It is respectfully posited that a preliminary injunction should not and cannot issue. Intervention-Plaintiff has failed to show a high likelihood, as she claims in her moving papers, or likelihood that a de facto merger took place in this matter. Moreover, there was no fraudulent transfer of assets, or surreptitious activity of any nature to defraud creditors by D’ Angelo and DLA. Public policy supports the traditional recognition of the corporate form and limited liability of same absent a showing of all 4 elements of the successor liability doctrine. A weighing of the balance of the harms, should this Honorable Court order an Injunction with the scope and parameters of what Intervention-Plaintiff seeks would tip the scales on inequity of those clients, creditor and employees and their families who depend on the capability of DLA to continue to operate. 10Case 1:16-cv-12383-IT Document 168 Filed 12/04/18 Page 11 of 11 Dated: December 4, 2018 Respectfully submitted, Defendants, Stephen D’Angelo and D'Angelo Law Group, LLC by their attorneys, COSSINGHAM LAW OFFICE, PC /sf Kenneth A Cossingham Esquire BBO#100970 Thomas C. LaPorte, Esquire BBO#634194 Cossingham Law Office, PC 30 Massachusetts Ave., Suite 404 North Andover, MA 01845 Tel: 978-685-5686 Fax: 978-794-0985 kcossingham@cossinghamlaw.com CERTIFICATE OF SERVICE I, Kenneth A. Cossingham, Esquire hereby certify that on this 4" day of December 2018, a copy of the foregoing Opposition to Emergency Motion for Preliminary Injunction was served via the Court’s CM/ECF system to the registered participants as identified on the Notice of Electronic Filing (NEF) and paper copies will be sent to those indicated as non-registered participants. Ish Kenneth A. Cossingham, Esquire 11IB MCVOINIGA ~— Ide Case 1:16-cv-12383-IT Document 168-1 Filed 12/04/18 Page 1 of 2 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS SABA HASHEM, individually, andasa = * Member of, and derivatively on behalf of, * D’Angelo and Hashem, LLC, * Plaintiff, * Civil Action No. 16-cv-12383-IT * Vv. * * STEPHEN L. D’ANGELO, D’ANGELO * LAW GROUP, LLC, and D’ANGELO * AND HASHEM, LLC * Defendants AFFIDAVIT IN SUPPORT OF OPPOSITION TO EMERGENCY MOTION FOR PRELIMINARY INJUNCTION I, Stephen L. D’Angelo, do hereby depose of my own personal knowledge the following: 1. T operate on a cash-flow basis like most other businesses. However, I have no predictability regarding that flow. I cannot predict settlements. Trials are even more complex. It is next to impossible to conduct a break-even analysis on a single case. 2. The success of the business is wholly dependent upon cases. I use lines of credit and my own funds to finance the firm, to carry it over during lag periods. 3. Ifthe Court freezes the funds as Plaintiff seeks, ] will need to close the doors. Settlement funds, as is evidenced in the accounting for the Toll Brothers Settlement, are typically used to pay off arrearages, including taxes, payment to trade creditors, rent, utilities, and payroll.Case 1:16-cv-12383-IT Document 168-1 Filed 12/04/18 Page 2 of 2 4. Ihave several staff employees as well as professional staff which depend on this cash- flow for their livelihoods and to provide for their families, including the simplest items like groceries and rent. I declare under the penalties of perjury that the foregoing is true and accurate. ‘sf Stephen L. D’Angelo, Esquire